LONDON, Jan 24 The euro rose against the yen and
the dollar on Thursday after better-than-expected economic data
indicated the worst of the crisis in the single currency zone
may have passed.

The euro saw choppy trade after flash manufacturing and
services sentiment data showed a divergence among countries,
with a disappointing performance in France balanced out by
numbers out of Germany showing its private sector expanded the
most in a year.

Traders said macro funds and asset managers were buying the
euro and if data continued to show that prospects for the region
were improving, the currency could rise further.

"The euro dipped on French numbers and was up on the German
data. On the whole there is positive sentiment for the euro,"
said Niels Christensen, FX strategist at Nordea.

"...(It) seems capped at $1.34 for now but it is fair to say
the euro is still firm across the board."

The common currency was flat against the dollar at
$1.3322, not far from $1.3404, a 11-month high touched on Jan.
14, which is also acting as near-term resistance.

The euro rose 1.2 percent against the yen to touch
119.58 yen, inching towards a 20-month high of 120.73 yen hit on
Friday.

Against the yen, the dollar rose 1.15 percent to a
session high of 89.65 yen, pulling away from a one-week low of
88.06 yen hit the previous day. The dollar had reached a 2-1/2
year high of 90.25 yen on Monday.

Analysts said the influential German Ifo survey on Friday
along with the announcement on the size of next week's first
repayments of cheap three-year loans taken by banks from the
European Central Bank just over a year ago would sway the euro
in the coming session.

Banks took more than 1 trillion euros in the LTRO loans from
the ECB. A Reuters poll showed traders expected about 100
billion to be paid back next week.

YEN WEAKNESS RESUMES

The yen fell across the board. Its weakness became more
entrenched after Japanese Prime Minister Shinzo Abe said he
expected the Bank of Japan to achieve its 2 percent inflation
goal as soon as possible.

Traders also attributed the yen's losses to position
squaring by short-term players after the currency's bounce over
the past few days.

The yen had rebounded earlier this week after the BOJ
disappointed some, who were expecting an immediate increase in
its asset-purchasing programme. This was despite the central
bank delivering its most aggressive policy easing yet to snap
the economy out of years of stagnation.

The dollar's pullback versus the yen after the BOJ's
announcement on Tuesday has proved shallow so far and many
believe dollar/yen will continue to climb over time.

"We saw a little clearout of short-term speculative
positions, which is only healthy in an uptrend. I don't think
there's any change to the trend because of it," said Jesper
Bargmann, Asia head of G11 spot FX for RBS in Singapore.

"I think we will struggle to break 91, but I will still keep
looking for us to trade above 90 in the short term," Bargmann
said, referring to the outlook for the dollar versus the yen
over the next week or so.

The yen could slide further, partly because BOJ Governor
Masaaki Shirakawa, whose term ends in April, is seen likely to
be replaced with someone more dovish, who could then bring
forward any easing.

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